Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 13, Problem 13.2P
a
To determine
To know:
Price ratio of good x and y.
b)
To determine
To prove:
Demand for good x and y
c)
To determine
To find:
Labor allocation between x and y.
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What does the Pareto efficiency criterion state? A. An allocation of resources is efficient if it maximizes government revenue B. An allocation of resources is efficient if it maximizes producer surplus C. An allocation of resources is efficient if it is impossible to make someone better off without making someone else worse off D. An allocation of resources is efficient if it allocates resources equally among all individuals
The production possibilities frontier curve illustrates that
a.
an economy's capacity to produce is unrelated to its population.
b.
if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced.
c.
an economy will automatically move toward a point at which all of its resources are being used inefficiently.
d.
if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
In an economy, only one combination of goods is productive efficient. True or false?
Chapter 13 Solutions
Microeconomic Theory
Knowledge Booster
Similar questions
- Which of the following is an example of how a firm can change production so that it can meet an unattainable point on the production possibilities curve? One way to produce at a point outside of the curve would be to reduce the number of employees working. One way to produce at a point outside of the curve would be to purchase fewer resources. One way to produce at a point outside of the curve would be to purchase the same amount of resources. One way to produce at a point outside of the curve would be to purchase more resources.arrow_forwardFrom the previous analysis, you can determine that as Musashi increases his production of tea towels, his opportunity cost of producing one more tea towel decreases increases remains constantarrow_forwardWhat do you understand by the following terms: - Bounded rationality - Opportunismarrow_forward
- Analyze how pareto efficiency is achieved from consumption activities in an economyarrow_forwardProduction possibilities represent the various combinations of two goods that can be produced given (a) fixed resources and (b) fixed technology. All combinations on the production possibilities curve represent the full-utilization of resources. Any point inside the production possibilities curve indicates that resources are under-utilized and more output could be produced with the available resources. Any point outside the production possibilities curve indicates that the available resources can't support the production of the given output combination. At full-utilization of resources, the only way to increase the production of both goods is by shifting the production possibilities curve. Now consider my backyard garden. I have 100 square feet of allocated space for the vegetable garden which is my fixed resource. for simplicity, I am growing only two vegetables: tomatoes and eggplant. If I grow all tomatoes, I can get a total of 10lbs, and if I grow all eggplant 8lbs. By producing…arrow_forwardCome up with an example with four agents and four items in which there is only one Pareto efficient allocationarrow_forward
- Which of the following is true of an economy’s production possibilities curve? a. It shows the combinations of any two resources that can be used to produce an efficient level of output. b. It shows the alternative combinations of goods that can be produced by fully employing scarce resources. c. It must be a straight line when all resources are fully employed. d. It is bowed in (convex to the origin) because of changing levels of technology. e. It is bowed out (concave to the origin) when marginal opportunity costs are constant.arrow_forwardConsider your decision to read this textbook on economics. Identify which of the four core principles of economics (the cost benefit principle, the opportunity cost principle, the marginal principle, or the interdependence principle) is most relevant for the following aspects of that decision. Reading this textbook will help establish a solid foundation for understanding concepts you will learn in more advanced economics courses. Reading this textbook will require time and effort, but doing so will help you improve your grade in this course. The time you will spend reading this textbook could instead be used to study for your chemistry exam. Each extra page that you read and each practice problem that you complete will help you increase your understanding of the material.arrow_forwardWhich of the following is illustrated by a production possibilities curve that is "bowed out" or concave to the origin? options: a trade-off in which the opportunity cost of a good decreases with the level of its production a trade-off in which the opportunity cost of a good increase with the level of its production a trade-off in which the opportunity cost of a good is constant at all levels of production the fallacy of compositionarrow_forward
- The production possibilities curve illustrates the basic principle that: Question 70 options: an economy automatically seeks that level of output that employs all of its resources any production point below the curve reflects high opportunity cost the production of more of any one item will in time require smaller and smaller sacrifices of other items if all the resources of an economy are fully used, more of one item could be produced only if less of another item is produced any production point above the curve reflects low opportunity costarrow_forwardIf an allocation of resources is efficient, thenarrow_forwardWhich is the correct answer ? Coffee and doughnuts are complements in consumption. Suppose bad weather in the coffee producing regions of the world, which shifts the coffee supply curve leftward. How do the general equilibrium price and quantity outcomes compare to the partial equilibrium outcomes for this situation? A. General equilibrium price and quantity are higher. B. General equilibrium price is higher and quantity is lower. C. General equilibrium price is lower and quantity is higher. D. General equilibrium price and quantity are lower.arrow_forward
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